Hedge funds gain more than $225 billion in 2013

The Eurekahedge Hedge Fund Index was up 0.99% in December, bringing the yearly returns for 2013 to 8.02%. The MSCI World Index returned 1.67% in December and was up 21.1% for 2013.

Hedge funds remained in positive territory throughout the year, suffering a setback in June and August of 2013 as uncertainty loomed in the underlying markets following the Fed's 'taper scare.' Overall, hedge fund managers were up 2.53% in the first half and 5.36% in the second half of the year. Most regional mandates ended the year on a positive note, with Japan and Greater China focused hedge funds outshining the rest. Among investment strategies, distressed debt investing hedge funds were the best performers during the year, with long short equity and event driven strategies also delivering strong returns.

In terms of capital raising, North American fund managers were the most successful attracting US$73.6 billion of asset inflows during the year, followed by European and Asia ex-Japan fund managers who saw capital allocations of US$62.4 billion and US$11.0 billion in 2013.

Funds of hedge funds had their best year relative to the hedge fund industry on record.

Hedge fund highlights for 2013:

  • Hedge fund returns were up for the fourth consecutive month with the Eurekahedge Hedge Fund Index gaining 0.99% in December and 8.02% overall in 2013
  • Total assets grew by US$228.8 billion – the fastest annual growth on record since 2007 with total assets under management of the hedge fund industry standing at a historic high of US$2.01 trillion
  • Hedge fund managers attracted US$146.1 billion in the form of net capital allocations during the year – an impressive turnaround given the industry saw a total of US$109.6 billion of net asset flows in the previous three years combined
  • Hedge funds focused on Asia Pacific realised the best returns and were up 15.3% in 2013 with Japan and Greater China focused hedge funds delivering the best regional results up 25.7% and 19.3% respectively.
  • The Mizuho-Eurekahedge Index, an asset-weighted index, finished the year with gains of 6.63% indicating that the larger funds slightly underperformed the small and medium sized funds.
  • Distressed debt hedge funds delivered the strongest performance among all strategies, gaining 16.8% in 2013, while long/short equities hedge funds were up 14.3% followed by event driven hedge funds which gained 11.3% during the year
  • The Eurekahedge Fund of Funds Index was up 7.79%, marginally behind hedge funds as multi-managers posted their best performance since 2009
  • Fund of hedge funds managers' are now tracking hedge funds more closely than ever with multi-managers outperforming underlying hedge funds in 6 out of the 12 months this year. A combination of reduced fees, increased diversification and the weeding out of underperforming fund of funds has rendered the multi-manager model more agile than ever.

Asset flows for 2013

2013 (US$ bn)

2012 (US$ bn)

North American Hedge Funds

73.6

6.7

European Hedge Funds

62.4

-5.2

Japan Hedge Funds

-0.3

-1.9

Asia ex-Japan Hedge Funds

11.0

-2.4

Latin American Hedge Funds

-0.5

-0.9

Global Hedge Funds

146.1

-3.8

 

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